EU’s tougher Google deal derails FTC agreement

European regulators appear headed toward a dramatically different conclusion to their antitrust probe of Google than their American counterparts — a binding agreement that could cost the search company dearly if violated.

That’s one of several reasons why the expected Federal Trade Commission settlement that sources said was a done deal unraveled Tuesday.

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The FTC will now continue its probe of Google likely into 2013, according to a source with knowledge of the probe. Other sources told POLITICO the decision to keep the investigation open was made after a barrage of criticism hurled at the agency by state attorneys general, Google rivals and others who thought that the European Union was liable to get a better deal requiring a deeper level of commitment.

Neither agency was ever expected to formally label Google a monopoly or a violator of antitrust laws, but all signs pointed to the FTC concluding its case with voluntary concessions while the EU would extract a binding agreement that could significantly alter how the search engine operates there.

“This accentuates the lead role Europe has in setting standards for dominant firm behavior,” said former FTC Chairman William Kovacic, immediate predecessor to current FTC chief Jon Leibowitz. “If the FTC does nothing more than say ‘Just tell us you’ll be good’ and the Europeans impose limitations as to how Google deploys their search product, it reinforces that Europe is the place to go to complain about dominant corporate behavior and get results.”

If the FTC case rolls into 2013, it will go against Leibowitz’s public statements that he wanted it resolved by the end of 2012. The chairman has been open about his interest in leaving his post in early 2013, but in recent days sources say he had also become sensitive to the appearance that the FTC was rushing the Google case to its conclusion to conform to that timetable.

On Tuesday, EU competition commissioner Joaquín Almunia emerged from a private meeting with Google Executive Chairman Eric Schmidt in Brussels to say he expects Google to submit a so-called Article 9 proposal by next month that would resolve his office’s nearly two-year investigation.

Article 9 of the EU Antitrust Regulation outlines a process by which a company offers a “voluntary” settlement and both competitors and consumers have time to provide public comment in an effort to “market-test” the solutions. Then Almunia may accept it.

Both agencies have been probing Google on allegations the Mountain View, Calif.-based behemoth violates antitrust laws and behaves in an anti-competitive manner by manipulating its search results to steer users to its own products for shopping, maps and other online applications.

The FTC was reportedly ready to accept a deal under which Google agreed to change business practices to ease the portability of its search advertisements to rival search services and limit the use of “snippets” of content from competitors’ review websites.

Almunia has been more publicly critical of Google than Leibowitz, repeatedly referencing a list of areas he thinks need resolution. In Tuesday’s statement, Almunia again cited those, which involve search manipulation, the various ways Google sells and displays its ads, and the use of copyrighted material from other sites.